Ownership with a green twist: the role of top managers in driving environmental innovation

Purpose This study aims to explore the relationship between managerial ownership and environmental innovation, particularly focusing on the impact of minority shareholder protection within the context of China’s A-share listed companies. Design/methodology/approach The study employs a fixed effect model over a decade-long sample, analysing secondary data from nonfinancial Chinese A-share firms. The two-stage least squares (2SLS) method is adopted to address endogeneity concerns. Findings The results demonstrate a significant positive influence of managerial ownership on environmental innovation, suggesting that top managers who have a say in the boardroom are inclined towards sustainable development. The presence of minority shareholders' protection positively moderates this relationship, underlining their roles in fostering environmentally friendly development. The subsample analysis showed that these relationships vary between state-owned enterprises (SOEs) and non-SOEs. It also differs between heavily and lightly polluting industries, which indicates that it is not enough to just have internal self-management, and more external pressure is necessary in heavily polluting industries. Research limitations/implications Our study underscores the importance for managers to recognize the potential of aligning their ownership interests with environmental objectives. Companies can enhance their commitment to sustainability by fostering an internal environment that supports minority shareholder rights. Originality/value This study specifically focuses on the role of top managers and minority shareholders, providing new empirical evidence on how their influence can drive sustainable development initiatives. It is also among the few studies that differentiate between firm characteristics and pollution intensity, which provides valuable insights into how the impact of managerial ownership and minority shareholder protection varies across different contexts.